Spotlight shining on Clear Channel cuts


When you’re the biggest radio group in the country you attract more media attention than anyone else. Not only is the tabloid New York Post reporting that pink slips will be flying tomorrow at Clear Channel Radio stations coast to coast, but the venerable Wall Street Journal has also published a story on the anticipated staff cuts.

The radio industry has been waiting for the CC Radio cuts since CC-owned Katz Media Group cut 8.5% of its sales force earlier this month. That came as CC Radio managers wrapped up budget meetings in Dallas, with marching orders to prepare cuts across the station clusters and Premiere Radio Networks. The grapevine has lately been saying that those cuts will begin tomorrow.

The New York Post played the staff cuts timing as an attempt to dodge media glare by handing out pink slips on the same day as the world is focused on the Barack Obama inauguration as US President in Washington, DC. Noting that Clear Channel has been criticized in the past for using voice tracking to use a single DJ across multiple markets, the Post said CC Radio was expected to move toward a “national programming” model which would require less local staff. It put the goal for cost-cutting at $400 million in annual costs and said it would also extend across Clear Channel Outdoor and the international divisions, not just domestic radio.

The Wall Street Journal also cited the $400 million number and said Clear Channel would cut 7% of its staff, some 1,500 employees, mostly in sales. The WSJ also said CC Radio “is likely to eliminate chunks of local programming and replace it with national programming.” In sales, it said lesser-performing salespeople will be let go and their accounts given to the best salespeople so they can maximize their compensation.

RBR/TVBR observation: The staff cuts that appear to be coming at Clear Channel aren’t any greater on a percentage basis than those already made by some smaller groups – it’s just that the total number grabs attention because it is so much larger. We’ve heard 1,100 people. The WSJ puts the number at 1,500. But if the rumors are correct that CC Radio is cutting its sales force and substituting national formats for local programming, it could create wonderful opportunities for its local radio competitors.

CC Radio is already understaffed on the sales side, with many AEs carrying a much longer client list than they can service well. Giving top-performing AEs even longer lists by firing poor performers won’t add any hours to the day for those over-extended really good AEs to do more work.

Meanwhile, it should be pretty easy for PDs at competing local stations to outmaneuver nationally-produced formats in top music genres. Radio is, after all, a local medium.

The likely outcome for TH Lee Partners and Bain Capital as the new owners of Clear Channel? Lower ratings and lower revenues. Are these smart guys or what?

PS: After Clear Channel do not be surprised to see a few others that are in deep trouble ride the coat tails of Clear Channel to do their pink slipping as the attention is being paid to the big dog. RBR hears that Citadel is going to slice and dice big time.